Just a crore of FDI in de­fence

SP's MAI - - MILITARY UPDATES - —Ro­hit Sri­vas­tava

At a time when In­dia is mak­ing ef­forts to re­duce its de­fence im­port bill and de­velop de­fence man­u­fac­tur­ing through ‘Make in In­dia’ ini­tia­tive, the For­eign Di­rect In­vest­ment (FDI) fig­ures shared by the govern­ment shows lit­tle in­ter­est of the world in In­dian de­fence sec­tor.

Ac­cord­ing to the govern­ment’s fig­ure given in the Par­lia­ment, In­dia re­ceived FDI of around $0.18 mil­lion “in de­fence in­dus­try sec­tor from April 2014 to De­cem­ber 2017.” Go­ing by the cur­rent con­ver­sion rate, this amount comes to Rs 1.17 crore.

This in­for­ma­tion was given by Min­is­ter of State for De­fence Dr Sub­hash Bhamre in a writ­ten re­ply in Lok Sabha on March 7, 2018.

In 2016, In­dia re­vised its FDI policy on var­i­ous sec­tors in­clud­ing de­fence. In the new policy, FDI up to 49 per cent “is un­der au­to­matic route and be­yond 49 per cent is through govern­ment route wher­ever it is likely to re­sult in ac­cess to mod­ern tech­nol­ogy or for other rea­sons to be recorded.”

Last year, Govern­ment in­formed Par­lia­ment, “In the year 201415, FDI of $0.77 lakh and $0.01 lakh has been re­ceived from France and Is­rael re­spec­tively. In the year 2015-16, FDI of $0.95 lakh has been re­ceived from France. In the year 2016-17, FDI of $0.01 lakh has been re­ceived from Is­rael.”

Th­ese fig­ures clearly show that the for­eign in­vestors are not in­ter­ested in mak­ing di­rect in­vest­ment in In­dian com­pa­nies. In­stead of in­vest­ment, for­eign play­ers tends to form joint ven­tures with In­dian pri­vate and pub­lic sec­tor for par­tic­i­pa­tion in de­fence contracts where if se­lected In­dian com­pa­nies would es­tab­lish fac­to­ries and for­eign part­ner would sup­port through tech­nol­ogy trans­fer for man­u­fac­tur­ing of goods in In­dia.

In last few years, global ma­jors have started fully owned In­dian sub­sidiary, which does not re­quire much FDI.

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